As US President Trump recently urged legislators to complete stablecoin-related legislation by August, the US Securities and Exchange Commission (SEC) issued a new guideline yesterday, clearly stating that certain stablecoin types do not constitute securities and thus do not need to comply with traditional securities trading reporting obligations.
This new classification defines "Covered Stablecoins", with core conditions being fully backed by physical fiat currency reserves or high-liquidity, low-risk short-term assets, and capable of 1:1 USD exchange.
Crypto King David Sacks Takes a Stance
White House AI and crypto king David Sacks wrote today:
SEC has determined that fully reserved, liquid, USD-backed stablecoins are not securities. Therefore, minting or redeeming these stablecoins on the blockchain does not require registration under the Securities Act.
He believes this clarification will bring a clearer regulatory environment to the stablecoin market.
SEC Defines Five Standards for "Qualified Stablecoins"
In the guideline, SEC especially emphasized that a key factor in qualified stablecoins not being considered securities is their marketing positioning. Such stablecoins should focus on being tools for payment, fund transfer, or value storage, not investment products. Specifically, their marketing should meet the following points:
- Designed to maintain stable value with USD (e.g., 1 stablecoin corresponding to 1 USD);
- Do not provide holders with any interest, profit, or other returns;
- Do not represent investment or ownership of the issuer or any third party;
- Do not grant token holders any governance or voting rights;
- Do not allow token holders to gain or bear any risks or benefits from the issuer's or third party's financial performance.
SEC believes only stablecoins marketed in this manner can exclude the risk of being classified as securities.
Reserve Asset Regulations Become More Stringent
In terms of reserve assets, SEC also proposed more stringent requirements. Qualified stablecoins must be backed by physical USD or high-liquidity, low-risk assets like short-term US Treasury bonds, and:
Completely isolate reserve assets from the issuer's operating capital;
Cannot be used for lending, pledging, re-pledging, or any form of investment operation;
Cannot be used to pay company operating expenses or general business purposes;
Should be designed to not be affected by third-party debt claims;
Can retain interest income from reserve assets but cannot distribute it to stablecoin holders.
Additionally, SEC encourages issuers to regularly publish "Proof of Reserves" as a transparent verification mechanism for reserve sufficiency.
Notably, while SEC clearly states that qualified stablecoins do not constitute securities, it has not explicitly clarified the legal status of algorithmic stablecoins like Terra and Frax, or stablecoin products designed to provide returns, which may potentially face risks of being viewed as securities, leaving their compliance in a gray area.
Stablecoins Are Tools to Consolidate US Dollar Hegemony
SEC's latest stance also aligns with previous congressional bills like the GENIUS Stablecoin Act and the 2025 Stablecoin Act. These legislative drafts view stablecoins as financial tools to strengthen the USD's international status, rather than innovative financial products with returns.
US Treasury Secretary Scott Bessent also stated at the White House Digital Assets Summit on March 7 that stablecoins will be a core tool in promoting the USD's global dominance.
Corresponding to this strategic thinking, SEC explicitly prohibits issuers from using reserve assets for market investments and requires fund isolation, further highlighting regulators' view of qualified stablecoins as "digital USD carriers" rather than crypto investment tools.
SEC Internally Still Has Divergent Voices
However, there is not complete consensus within SEC about this guideline. SEC's sole Democratic commissioner, Caroline Crenshaw, subsequently issued a statement criticizing the guide for legal and factual errors, believing it "distorts the current state of the USD stablecoin market and significantly underestimates its risks".
She directly stated that calling such products "digital USD" is an incorrect and misleading marketing description. These private stablecoins lack USD credit guarantees, have no insurance protection, and harbor risks in a complex, layered market structure. SEC's description instead reinforces the industry's misunderstanding of stablecoins' "safety and stability".
